A proposed rule published yesterday would implement approximately a 3.35 % decrease in Medicare payments to home health agencies (HHAs) for calendar year (CY) 2012. This reduction would include the combined effects of a $310 million increase in market basket and wage index updates and a $950 million decrease to the home health prospective payment system (HH PPS) rates to account for increases in aggregate case-mix that are largely related to billing practices and not related to changes in the health status of patients.

This 3.35% decrease in payment is the result of several provisions in the proposed rule. Provisions of the Affordable Care Act (ACA) mandate that the Centers for Medicare and Medicaid Services (CMS) apply a 1% reduction to the CY 2012 home health market basket amount, which equates to a proposed 1.5% update for HHAs next year. HHAs that submit the required quality data would receive payments based on this full home health market basket update. If an HHA does not submit quality data, the home health market basket percentage increase would be reduced by 2%, resulting in a 0.5% percent decrease for those non-reporting agencies in CY 2012. As part of the HH PPS rate update, CMS also proposes to reduce HH PPS rates by 5.06% in CY 2012 to account for the increase in the case-mix that is unrelated to changes in patient acuity.

The Medicare HHA proposed rule also would make structural changes to the HH PPS by removing 2 hypertension codes from the case-mix system, lowering payments for high-therapy episodes and recalibrating the HH PPS case-mix weights to ensure that these changes result in the same amount of total aggregate payments.

To add flexibility to its face-to-face encounter requirement, Medicare has proposed to allow physicians who attended to a home health patient in an acute or post-acute setting to inform the certifying physician of their encounters with the patient. Current policy requires a certifying physician or an allowed non-physician practitioner to see a patient prior to certifying a patient as eligible for the home health benefit.

In a separate proposed rulemaking also issued yesterday CMS would require comparable face-to-face encounters under the Medicaid program to better facilitate home health services provided to patients who are eligible for Medicare and Medicaid and to lessen the administrative burden on providers participating in both programs.

APTA is analyzing both rules and will provide comprehensive summaries shortly.